Petty cash 7500 cash 7500 to increase the petty cash

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Petty Cash .............................................................. 75.00 Cash .................................................................. 75.00 To increase the petty cash fund. Instructor note : The two entries on Jan. 31 can be combined into one entry. Part 2 If the January 31 reimbursement is not made and no entry is recorded, then the expenses would not be recognized and both net income and equity would be overstated by $157.65 ($40.00 + $38.19 + $58.00 + $21.46). Also, the petty cash asset and total assets would be overstated by $157.65. 8-25
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Chapter 08 - Cash and Internal Controls Problem 8-3B (30 minutes) Part 1 Mar. 5 Petty Cash ...................................................... 200 Cash .......................................................... 200 To establish the petty cash fund. Part 2 RPM Music Center Petty Cash Payments Report Delivery expense Mar. 11 Delivery of customer's merchandise ........... $ 8.75 Mileage expense Mar. 30 Reimbursement for mileage ......................... 58.80 Postage expense Mar. 28 Purchased postage stamps ......................... 16.00 Merchandise inventory (transportation-in)* Mar. 6 COD charges on purchases ......................... $14.50 Mar. 27 COD charges on purchases ......................... 47.10 61.60 Office supplies expense Mar. 12 Purchased file folders .................................. 12.13 Mar. 14 Reimbursement for office supplies ............. 9.65 Mar. 18 Purchased paper ........................................... 22.54 44.32 Total $189.47 * Transportation-in costs are included in Merchandise Inventory under a perpetual system. Part 3 Mar. 31 Delivery Expense ........................................... 8.75 Mileage Expense ............................................ 58.80 Postage Expense ........................................... 16.00 Merchandise Inventory .................................. 61.60 Office Supplies Expense ............................... 44.32 Cash Over and Short ............................... 1.00 Cash .......................................................... 188.47 To reimburse the petty cash fund. 31 Petty Cash ...................................................... 50.00 Cash .......................................................... 50.00 To increase the petty cash fund. 8-26
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Chapter 08 - Cash and Internal Controls Instructor note : The two entries on Mar. 31 can be combined into one. 8-27
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Chapter 08 - Cash and Internal Controls Problem 8-4B (30 minutes) Part 1 STYLE CO. Bank Reconciliation December 31, 2011 Bank statement balance .......... $45,091.80 Book balance ..................... ......................................... $31,743.70 Add: Add: Deposit of Dec. 31 ................. 7,666.10 Error (Ck 1267)... $ 18.00 52,757.90 Proceeds of note less $20 fee ..... 19,980.00 19,998.00 51,741.70 Deduct: Deduct: Checks No. 1242... $ 370.50 NSF check ........ $ 749.50 1273... 1,084.20 Printing fee ........ 79.00 1282... 390.00 1,844.70 828.50 Adjusted bank balance ............ $50,913.20 Adjusted book balance ........ $50,913.20 Part 2 Dec. 31 Cash ................................................................. 18.00 Office Supplies .......................................... 18.00 To correct an entry error. 31 Cash ................................................................. 19,980.00 Collection Expense ......................................... 20.00 Note Receivable ........................................ 20,000.00 To record note collection less fees. 31 Accounts Receivable—Titus Industries ........ 749.50 Cash ........................................................... 749.50 To charge account for NSF check plus fees. 31 Miscellaneous Expenses ................................ 79.00 Cash ........................................................... 79.00 To record check printing charge. Part 3 In a banking context, a debit memo is notification from the bank that it has debited the depositor's account. Since the depositor's account is a liability of the bank (a credit balance account), the debit notification means the bank has reduced the depositor's account balance. Conversely, a credit memo is a notification that the depositor's account has been credited, which means the bank has increased the depositor’s cash balance. 8-28
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Chapter 08 - Cash and Internal Controls Problem 8-5B (50 minutes) Part 1 SAFE SYSTEMS Bank Reconciliation May 31, 2011 Bank statement balance ............ $21,808.60 Book balance ................ ..................................... $15,270.20 Add: Add: Deposit of May 31 ................... 2,526.30 24,334.90 Proceeds of note less $100 fee .................... 7,200.00 22,470.20 Deduct: Deduct: Checks No. 1780 .... $1,325.90 NSF check ....... $431.80 1786 .... 353.10 Service charge .... 12.00 1789 .... 639.50 2,318.50 Error (Ck 1788) .... 10.00 453.80 Adjusted bank balance .............. $22,016.40 Adjusted book balance .... $22,016.40 Part 2 May 31 Cash ............................................................... 7,200.00 Collection Expense ....................................... 100.00 Note Receivable ...................................... 7,300.00 To record note collection less fee.
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